Kochi, Nov. 22 Pepper market last week witnessed downward trend on reports that the US has covered up to December and it might require pepper only for January to March 2010.
The latest official statistics shows that imports by the US during January to September this year was up by 435 tonnes to 36,740 tonnes from 36,305 tonnes in the same period in 2008. Total US annual imports are estimated at around 50,000 tonnes and the balance requirement for the remaining three months might come to around 14,000 tonnes.
If the reports from other origins/markets that the US has covered till December turn out to be a false propaganda, then there could be demand from the American markets. However, the real position is unknown and therefore uncertain, as the market reports of late are confusing and without any ethics, market sources here said.
The futures market here has been highly volatile and in the hands of bulls and bears, they told Business Line.
Based on the reports of expert analysts of brokers there were “buy and sell calls” creating high volatility in the futures market. Both were spreading bearish and bullish sentiments in the market and that apart from making the market highly volatile, it was confusing the trade, market sources said.
Domestic buyers, who had withdrawn from the declining market, are expected to re-appear in the market now. Of late, buying directly from the primary markets is taking place, trading sources said.
Meanwhile, big inter-state operators based in Rajasthan, Madhya Pradesh, Delhi, Bihar, Jharkhand, Maharashtra were actively buying large quantities based on the reports from a section of expert analysts. According to a report from Rajasthan, 25-30 bags of pepper have arrived in the State from Kollam (Kerala) by rail evading tax, market sources said. These operators buy and stock and then cater to other centres in the northern states.
Imports are said to be higher than the country’s pepper imports this year. Large quantities of black pepper are being imported for value-addition. Growers apprehend that some quantity of this might slip into the domestic market, which in turn, might pull the domestic market prices down.
Resumption of the North-East monsoon in the southern districts of Kerala might delay the harvesting further and has also contributed to the bearish sentiment.
The new technique announced by the Spices Board recently for converting green pepper into white might enthuse Kerala farmers now to convert their produce into white given the high premium for it in the domestic market, they said. This phenomenon could lead to a squeeze in the supply of black pepper in Kerala in case major growers resorted to doing so, trading sources added.
Indian parity in the overseas market ruled at $3,325 a tonne (c&f) for Europe and $3,425 a tonne (c&f) for the US and remained “totally outpriced”, they said. Therefore, no enquiries were forthcoming from the overseas markets, they added.
The futures market last week witnessed high volatility and eventually all the contracts closed below the previous weekend’s close.
December, January and February contracts fell by Rs 93, Rs 58 and Rs 77 respectively to close at Rs 15,136, Rs 15,345 and Rs 15,500 a quintal.
Total turnover dropped by 1,437 tonnes to close at 32,051 tonnes. Total open interest moved up by 719 tonnes to 11,524 tonne. November contract matured on November 20 and 246 tonnes for the month delivered.
Spot prices at the weekend remained unchanged at Rs 14,100 (un-garbled) and Rs 14,600 (MG 1) a quintal.
According to the International Pepper Community (IPC) report, the market remained quiet at most origins and prices were relatively unchanged as last week. In India, activities at the Commodity Exchange were limited. Some trading was taking place for December contracts. Futures prices were also reported to be stable. In Vietnam, the market was slower, in view of limited material at local market.
At HCMC, prices stood at VND 46,500 a kg locally throughout the week, while fob prices were at $2,775 and $2,875 a tonne for black 500 and 550 g/l respectively. Similar situations were also reported from Lampung and Sarawak, while in Sri Lanka, prices in growing areas increased marginally by 1 per cent.
The market was also quiet. In Bangka and Sarawak, prices were reported stable. Marginal increase was taking place in Hainan.
Indian pepper exports during April-October 2009 dropped to 11,500 tonnes from 14,450 tonnes in the corresponding period last fiscal. Indian shipments to the main market, the US, during January-September 2009 fell to 5,207 tonnes from 7,368 tonnes in the same period in 2008.Vietnam and Brazil had increased their exports to the US market while Indonesia’s exports were almost close to its 2008 shipments.
During 2008, India exported 26,665 tonnes of pepper, a decrease of around 22 per cent in volume from 32,000 tonnes in 2007. Unit value of export in 2008 was higher than in 2007. This was due to increased portion of pepper value added product exports in 2008, such as ground and green pepper.
During 2009, exports from India is estimated to decrease further as indicated by its export performance up to September 2009, the IPC report said.
Source : Business Line